PING AN OF CHINA(601318) 长江证券·2024-07-19 04:31Investment Rating - The report maintains a "Buy" rating for the company [2][6]. Core Views - The company is continuously advancing channel reforms and focusing on supply-side innovation while deepening its involvement in healthcare and comprehensive financial services. The recent financing will further strengthen the company's healthcare and elderly care ecosystem barriers and comprehensive financial layout, which is expected to enhance its product and pricing barriers in the future. The current 2024 PEV valuation is at 0.52 times, which is at the bottom range [2][5]. Summary by Sections Event Description - The company announced plans to issue USD 3.5 billion in H-share convertible bonds with a conversion price of HKD 43.71. It also plans to cancel 103 million A-shares repurchased between 2021 and 2022 [5]. Event Commentary - The convertible bond has a scale of USD 3.5 billion with a coupon rate of 0.875%. The bond will pay interest semi-annually and has a strong redemption clause. If fully converted, it will result in 600 million new shares, accounting for 3.43% of the current total share capital. The funds raised will be used for business development, capital replenishment, and to support the healthcare and elderly care strategy [5]. - The choice of USD convertible bonds is likely due to the flexibility of terms and lower financing costs compared to domestic perpetual bonds and capital replenishment bonds [5]. - The cancellation of 0.56% of shares will reduce the dilution effect of the convertible bonds. The company repurchased 103 million A-shares, which will now be canceled, further mitigating the dilution impact [5]. - The company is expected to enhance its ecosystem advantages, which is viewed positively for long-term growth. The financing will strengthen its healthcare and elderly care ecosystem and comprehensive financial services, aiding in building future product and pricing barriers [5].